Master the Metrics That Matter

An independent appraisal of a private company's common stock fair market value, required for issuing stock options.

Money a company owes to vendors and suppliers for goods or services received but not yet paid for.

How quickly a company pays its suppliers, indicating cash management practices and supplier relationships.

Money owed to a company by customers who have received goods or services but haven't yet paid.

How efficiently a company collects payments from customers, measured by how many times receivables are collected annually.

An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands.

Expenses that have been incurred but not yet paid or recorded in the accounts.

Interest that accumulates on convertible notes over time, typically converting to additional equity.

The percentage of new users who complete a key action indicating they've experienced the product's core value.

The average annualized revenue per customer contract, normalizing multi-year deals to show yearly value.

The systematic allocation of an intangible asset's cost over its useful life or legal life.

Protection that adjusts an investor's share price if the company later raises money at a lower valuation.

The average dollar amount spent per order, calculated by dividing total revenue by total number of orders.

The average monthly or annual revenue generated per active user or account, calculated by dividing total revenue by total users.

The total value of recurring revenue normalized to a one-year period, calculated by multiplying MRR by 12.

A measure of how efficiently a company uses its assets to generate revenue.

A financial snapshot showing what a company owns (assets), owes (liabilities), and the residual value to shareholders (equity).

The amount invoiced to customers in a period, representing cash that will be collected regardless of revenue recognition timing.

The governing body responsible for major company decisions, composed of founders, investors, and independent members.

The total value of new contracts signed in a period, representing committed future revenue regardless of when it will be recognized.

The point where total revenue equals total costs, meaning the business is neither profitable nor losing money.

Short-term funding to extend runway until the next equity round or specific milestone.

Short-term financing to extend runway until a larger funding round closes, typically from existing investors.

A structured financial plan that forecasts revenue and expenses over a defined period, used to guide spending decisions and track performance.

A capital efficiency metric showing how much cash is burned to generate each dollar of new annual recurring revenue.

The rate at which a company spends its cash reserves, typically measured as net cash spent per month.

The total cost of acquiring a new customer, including all marketing and sales expenses divided by the number of new customers acquired.

The number of months required to recover the cost of acquiring a customer through their subscription payments.

A spreadsheet showing who owns what percentage of a company, including all shares, options, and convertible instruments.

A GP's formal request for LPs to transfer a portion of their committed capital to fund investments or cover expenses.

A document showing company ownership, including all shareholders, share counts, ownership percentages, and security terms.

The share of investment profits that fund managers receive as compensation, typically 20% of gains.

The percentage of online shoppers who add items to their cart but leave without completing the purchase.

An accounting method that records transactions only when cash is received or paid out.

The number of days between paying for inventory and collecting cash from customers.

The movement of money into and out of a business, showing actual liquidity rather than accounting profit.

The most conservative liquidity measure, comparing only cash and equivalents to current liabilities.

The number of months a startup can operate before running out of cash, calculated by dividing current cash by monthly net burn rate.

The ratio of annual cash income to total cash invested, measuring yield on actual dollars deployed.

A categorized list of all accounts used to record financial transactions in the general ledger.

The percentage of customers or revenue lost over a specific period, measuring how quickly you're losing business.

A clause requiring GPs to return excess carried interest if later fund performance doesn't justify early distributions.

A waiting period before any equity vests, typically one year, protecting companies from early departures.

The direct costs of producing and delivering your product or service, subtracted from revenue to calculate gross profit.

Grouping users by signup date and tracking their behavior over time to reveal trends and product improvements.

Basic ownership shares with voting rights but no special preferences, typically held by founders and employees.

A valuation method that determines company value by comparing financial multiples to similar public or private companies.

Revenue lost when existing customers downgrade their plans or reduce usage, distinct from churn where customers leave entirely.

The amount each sale contributes toward fixed costs and profit after subtracting variable costs directly tied to that sale.

A percentage reduction in share price that convertible investors receive when converting to equity.

The percentage of visitors who complete a desired action, such as making a purchase or signing up for a service.

A debt instrument that converts to equity in a future funding round, featuring interest accrual and a maturity date.

The marketing cost to acquire one new customer, measuring acquisition efficiency by channel or campaign.

A liquidity ratio measuring ability to pay short-term obligations with current assets.

The degree to which revenue depends on a small number of large customers.

A composite metric combining usage, engagement, and sentiment signals to predict customer renewal likelihood.

The percentage of customers who continue doing business with you over a specific period, measuring loyalty and satisfaction.

The ratio of daily active users to monthly active users, measuring how frequently users engage with a product.

The average number of days a company holds inventory before selling it.

The average number of days a company takes to pay its suppliers and vendors.

The average number of days it takes to collect payment after a sale is made.

A measure of available cash flow to pay current debt obligations, including both principal and interest.

A measure of financial leverage comparing total debt to shareholders' equity.

Money received from customers for services not yet delivered, recorded as a liability until the service is provided and revenue can be recognized.

The systematic allocation of a tangible asset's cost over its useful life.

The reduction in ownership percentage when new shares are issued, occurring during funding rounds and equity grants.

A percentage reduction on the next round's share price for SAFE or convertible note holders, rewarding early risk.

A valuation method that estimates business value by projecting future cash flows and discounting them to present value.

The structured sequence determining how fund profits are split between LPs and GPs, including return of capital, preferred return, catch-up, and carried interest.

Vesting acceleration that requires both a company acquisition AND termination of employment to trigger.

A funding round where the company raises money at a lower valuation than its previous round.

A fund performance metric showing actual cash returned to investors relative to invested capital.

A provision allowing majority shareholders to force minority shareholders to join in the sale of a company.

Committed but uncalled capital that a venture fund has available to deploy into new or existing investments.

The comprehensive investigation of a company by potential investors or acquirers before completing a transaction.

Operating profit before financing costs and taxes are deducted, showing how much money the core business generates.

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operational profitability excluding financing and accounting effects.

The ratio of net new ARR to sales and marketing spend, measuring how efficiently growth investment converts to revenue.

The reduction in existing shareholders' ownership percentage when new shares are issued.

The price an option holder pays to convert options into shares, set at fair market value when granted.

The ratio of exit proceeds to original investment, showing how many times the invested capital was returned.

Additional revenue generated from existing customers through upsells, cross-sells, and increased usage beyond their original purchase.

Free cash flow as a percentage of revenue, measuring how efficiently a company converts revenue into actual cash.

Free cash flow divided by market capitalization or enterprise value, measuring how much cash a company generates relative to its valuation.

The percentage of users actively using a specific feature, measuring whether features deliver value.

How efficiently a company uses its fixed assets (property, equipment) to generate revenue.

The cash remaining after operating expenses and capital expenditures, available for dividends, debt repayment, or reinvestment.

The percentage of free users who upgrade to paid plans, measuring the effectiveness of a freemium model.

The total number of shares that would exist if every option, warrant, and convertible instrument were exercised.

An investment fund that invests in other venture capital or private equity funds rather than directly in companies.

The year a venture fund began investing, used to compare performance across different market cycles.

The master record containing all financial transactions organized by account.

The fund managers who make investment decisions, manage portfolio companies, and have unlimited liability.

An intangible asset representing the excess paid to acquire a business over the fair value of its identifiable assets.

Gross burn is total monthly spending; net burn is spending minus revenue, showing actual monthly cash consumption.

The percentage of revenue remaining after subtracting direct costs of delivering the product, before operating expenses.

The total value of goods sold through a platform before fees, returns, or cancellations are deducted.

The percentage of revenue remaining after subtracting the direct costs of producing goods or services sold.

The percentage of recurring revenue retained from existing customers, excluding expansion revenue and only accounting for churn and contraction.

The minimum return a fund must deliver to LPs before GPs can take their share of carried interest.

The ratio of company valuation to annual revenue, showing how much valuation is based on future expectations versus current performance.

A financial statement showing revenue, expenses, and profit over a period, revealing whether the business made or lost money.

Investor rights to receive regular financial and operational updates from the company.

A measure of how easily a company can pay interest expenses on outstanding debt.

How many times a company sells and replaces its inventory over a period, measuring inventory efficiency.

How many times a company sells and replaces its inventory during a period, measuring inventory management efficiency.

The annualized return rate that makes the net present value of all cash flows equal zero.

The pattern where fund returns dip negative early due to fees and slow deployment, then turn positive as portfolio companies mature and exit.

A record of a single financial transaction with corresponding debit and credit entries.

The month-over-month percentage growth in qualified leads, serving as a leading indicator of future revenue.

Investors who provide capital to venture funds but don't participate in investment decisions.

The right of preferred shareholders to receive their investment back before common shareholders in a sale or liquidation.

Logo churn counts customers lost; revenue churn counts dollars lost. They reveal different aspects of retention health.

The total revenue a business expects to earn from a customer over the entire duration of their relationship.

The ratio comparing customer lifetime value to acquisition cost, indicating whether your unit economics support sustainable growth.

A sales efficiency metric measuring how much new ARR is generated for each dollar spent on sales and marketing.

The annual fee VC funds charge to cover operating expenses, typically 2% of committed capital.

Revaluing an asset to reflect its current market price rather than its original purchase price or book value.

The deadline by which a convertible note must be repaid or converted to equity.

Total value returned divided by total capital invested, expressing returns as a simple multiple.

The count of unique users who engaged with a product at least once in the past 30 days.

The amount of cash a company spends each month net of revenue, determining how long capital will last.

A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives.

The predictable revenue a subscription business expects to earn each month from active subscriptions.

The percentage of recurring revenue retained from existing customers over a year, including expansion and accounting for churn.

The change in Annual Recurring Revenue over a period, accounting for new customers, expansion, contraction, and churn.

The percentage of revenue remaining as profit after all expenses, taxes, and interest are paid.

The difference between current assets and current liabilities, measuring operational liquidity.

The single metric that best captures the core value a product delivers to customers, aligning company focus.

A customer loyalty metric measuring willingness to recommend, calculated as the percentage of promoters minus detractors.

The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn.

The total time from purchasing inventory to collecting cash from customers.

The percentage of revenue remaining after all operating costs, showing how efficiently a business converts revenue to operating profit.

The percentage of revenue remaining after deducting operating expenses, showing profitability from core business operations.

A percentage of company equity reserved for future employee stock option grants, typically 10-20% of fully diluted shares.

Preferred stock that receives its liquidation preference plus participates pro-rata in remaining proceeds with common shareholders.

A requirement that investors participate in future funding rounds or face conversion of preferred stock to common stock.

The time required to recover customer acquisition cost from the gross margin a customer generates.

The ratio of total sales pipeline value to revenue target, indicating whether there are enough opportunities to hit quota.

A company's valuation immediately after receiving new investment, equal to pre-money valuation plus new capital raised.

A company's valuation before new investment is added, serving as the negotiation anchor in any fundraise.

A class of stock with special rights including liquidation preference and anti-dilution protection, typically held by investors.

Payments made in advance for goods or services to be received in future periods.

The right for existing investors to participate in future funding rounds to maintain their ownership percentage.

A user who demonstrates buying intent through product usage, predicting higher conversion likelihood than marketing leads.

Net income divided by total employees, measuring how efficiently your team generates profit.

Veto rights given to preferred shareholders over specific major company decisions.

The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.

A stringent liquidity measure excluding inventory, showing ability to meet obligations with most liquid assets.

A growth efficiency metric comparing revenue added (new + expansion) to revenue lost (churn + contraction), showing net growth quality.

How many times per year a company collects its average accounts receivable balance.

The percentage of customers who make more than one purchase, indicating customer satisfaction and loyalty.

A measure of how efficiently a company uses its assets to generate profit.

A measure of how efficiently a company generates profit from shareholders' equity investment.

A measure of how efficiently a company uses all invested capital (debt and equity) to generate profits.

The percentage gain or loss on an investment relative to its cost, measuring the efficiency of capital deployment.

The percentage of orders returned by customers, measuring product satisfaction and description accuracy.

The vulnerability created when a large percentage of revenue comes from a small number of customers or products.

Projecting future revenue based on current trends, pipeline, churn, and expansion assumptions.

Total revenue divided by headcount, measuring how efficiently your team generates top-line growth.

The accounting principle determining when revenue is recorded, based on when it's earned rather than when cash is received.

An annualized projection of current revenue, calculated by multiplying recent monthly or quarterly revenue by 12 or 4 respectively.

Non-dilutive capital where repayment is a percentage of monthly revenue until a predetermined cap is reached.

The right to match any offer a shareholder receives before they can sell to a third party.

The revenue generated for every dollar spent on advertising, measuring the efficiency of paid marketing campaigns.

A benchmark stating that a SaaS company's growth rate plus profit margin should equal or exceed 40% to be considered healthy.

The amount of time a company can continue operating at its current burn rate before running out of cash.

The unrealized, paper value of a fund's remaining portfolio relative to invested capital.

An investment agreement that converts to equity in a future funding round, featuring a valuation cap and/or discount without debt terms.

The average time from first prospect contact to deal close, measuring how long the sales process takes.

Creating multiple financial models with different assumptions to prepare for a range of possible futures.

Growth in the number of paid users within existing customer accounts, a key driver of expansion revenue.

A marketplace where existing investors sell their fund stakes or company shares to new buyers before an IPO or fund liquidation.

A transaction where existing shareholders sell their shares to another buyer rather than the company issuing new shares.

The percentage of inventory sold compared to what was received, measuring how quickly products move.

The total financial benefit a single owner-operator extracts from a business, used to value small businesses and startups.

The average time users spend in your product per visit, measuring engagement depth.

A measure of a company's ability to meet long-term obligations and continue operating indefinitely.

A legal entity created for a single investment, allowing multiple investors to pool capital into one deal.

The ratio of daily to monthly active users, measuring how often users return and engage with your product.

A provision allowing minority shareholders to join a sale if majority shareholders sell their stake.

The total revenue value of a customer contract over its full term, including all recurring and one-time fees.

A non-binding document outlining the key terms of a proposed investment before final legal documents are drafted.

The duration between a user signing up and experiencing meaningful value from the product for the first time.

A report listing all account balances to verify that total debits equal total credits.

A fund performance metric showing total value (realized + unrealized) relative to invested capital.

Payments received from customers for goods or services not yet delivered.

The analysis of revenue and costs at the individual customer or transaction level, determining whether each customer is profitable.

The maximum valuation at which a SAFE or convertible note converts to equity, protecting early investors from excessive dilution.

Comparing actual results to budget and investigating the reasons for differences to improve future forecasting.

Debt financing for venture-backed startups, typically used to extend runway between equity rounds without additional dilution.

The timeline over which equity ownership is earned, typically 4 years with a 1-year cliff before any shares vest.

The percentage of sales opportunities that convert to closed won deals, measuring sales effectiveness.

The difference between current assets and current liabilities, measuring ability to fund daily operations and meet short-term obligations.

Building budgets from scratch each period, requiring justification for every expense rather than adjusting historical spending.